Trouble Ahead for Mobile Order-Ahead?

August 10, 2018         By: Steven Anderson

There’s no two ways about it; mobile order-ahead—and by extension mobile payments—are having a field day. More and more services are stepping in to provide this valuable feature (and if you’ve never had food delivered, it’s a wonderful feeling) to an increasing variety of restaurants that are discovering that customers really want to get their dim sum without putting on pants. Yet even as the options mount, there are some concerns on the horizon as well.

Mobile order-ahead, mobile delivery, and mobile payments are in a growth pattern. We’re seeing it all over; most recently, India’s Swiggy bought fellow Indian firm Scootsy, and Swiggy had only about a year ago brought in $80 million in investment from South Africa’s Naspers. This is just one example among many—India has had around 400 food delivery startups show up in the last few years—and there may be some problems starting up soon.

Granted, India is a pretty big place. With the second-largest population and the seventh-largest area on Earth, there’s a lot going on here, and 400 food delivery firms might well be able to eke out a market accordingly. Given that these startups will be facing some established competitors as well, like Uber and Google, this could mean a lot of firms are about to go out of business but just don’t know it yet.

Moreover, India isn’t the only good example of food delivery taking off. China is rapidly discovering the joy of having prepared meals brought to your door, and in the United States, chains from McDonalds to Chipotle to White Castle are working on food delivery schemes of their own.

Here’s the problem, though; exploding competition is a good thing in the short term for customers, it inevitably, at some point, means a contraction in the market. Eventually, the lesser competition will die off since it can’t establish a market, and that’s going to leave us with a comparative oligopoly of food delivery options.

We’ve already seen a lot of innovation on the food delivery front. Robots are actively carting dinner around in some places, and we’re closer than ever to air-drops of food from drone aircraft. It’s a big market, but the sheer number of firms involved may mean cuts to come.